Negotiating for Public Benefits: The Bargaining Calculus of Public-Private Development

Abstract

US cities capture public benefits from private developers under several bargaining frameworks: exactions, incentive zoning and public-private developments. These frameworks exist along a continuum of policy-intervention strategies, from passive regulation to active development, from a quid pro quo to incentive to investment policy posture. Each strategy defines a public position, structure and process for negotiation and parameters for the bargaining process. Though the means differ, the common element is that each strategy calls upon private development to support the costs of the public-benefit package. During the 1980s, American cities succeeded in tapping this wellspring of private development in an unparallelled way through active public development. To secure these benefits, the policy strategy demanded that cities take on significantly greater risk to achieve their planning objectives. With a strong real estate market in their favour, both San Francisco and Los Angeles negotiated aggressive business deals to fund their public-amenities agendas. A key difference in the approaches can be explained by their respective attitudes towards risk-taking and control, attitudes which reflected differences in political culture. Whether to build the public amenities directly (San Francisco) or require their provision by developers (Los Angeles) remains a matter of judgement, its relative desirability conditional on the priorities, politics and risk tolerance of individual cities and their develop ment agencies. Experience varies and expertise matters.